July 7, 2020
Central Bank Governor confirms banks were not required to charge additional interest on COVID-19 payment breaks – Pearse Doherty TD

Sinn Féin spokesperson on Finance Pearse Doherty TD has criticised the banks for wilfully misinforming the Taoiseach and Minister for Finance at a meeting held on the 11th May, after the Governor of the Central Bank confirmed at the COVID-19 Committee that banks were not required by the regulator to charge additional interest on payment breaks taken due to COVID-19.

Since the 18th March, nearly 80,000 mortgage-holders impacted by COVID-19 have taken payment breaks which will see additional interest charged by as much as several thousand euro over the lifetime of the loans.

Speaking today, Teachta Doherty said: 

“In this week’s Business Post, Aiden Corkery reported minutes of a meeting held on May 11th between the five retail banks, the Banking and Payments Federation, the Minister for Finance and then Taoiseach Leo Varadkar.

“I have seen the minutes of that meeting.

“In the meeting, the CEO of Bank of Ireland claimed that the regulator required interest to be charged during the payment break.

“Today the Governor of the Central Bank confirmed that this was not the case.

“The CEO of AIB then claimed that if interest was not charged during the payment break, mortgage loans would default with the credit rating of customers impacted.

“The Governor of the Central Bank confirmed that this was also not the case.

“Indeed, I received correspondence from the Central Bank on 22nd June confirming that providing payment breaks whereby interest does not accrue during the break period was allowed under regulatory guidelines issued by the Banking Authority.

“At the same meeting, the CEO of the banking lobby, Brian Hayes, asserted that approach taken in Ireland was the same across Europe and in line with the rules banks had to follow.

“The Governor of the Central Bank confirmed today that this was also false.

“Indeed, in several European jurisdictions, legislation has been passed to ensure that no interest accrues during mortgage payment breaks, protecting customers impacted from COVID-19 from additional mortgage debt. These measures have been in full compliance with EBA guidelines.

“The banks and Government have ensured that no such protections are in place for Irish borrowers.

“It is a scandal that the banking industry and their lobby group deliberately misinformed the Taoiseach, Minister for Finance and Minister for Business over an issue that has impacted nearly 80,000 mortgage-holders and saddled them with additional debt.

“It is also disturbing that the Minister for Finance was unaware that payment breaks without interest accrual were consistent with regulatory guidelines, when the Spanish Government had passed legislation to provide for this more than a month before this meeting was even held.

“Today I have written to the CEOs of the five retail banks to clarify their position and will raise the issue with the Government.

“It is now clear that nearly 80,000 mortgage-holders hit by COVID-19 will be charged additional interest as a result of the banks guarding their profit margins and the Government falling asleep at the wheel.”

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